Is it cheaper to buy or rent?
A BNZ economist reports that while home ownership remains more expensive than renting in New Zealand, the cost gap has narrowed significantly since 2023. Lower mortgage rates and stagnant house prices have improved affordability, though regional variations persist.
Why it matters
This analysis provides insight into the shifting economic landscape for prospective homeowners and the impact of interest rates on housing affordability.
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Owning a home is significantly less expensive compared to renting than it has been in recent years, but how long is that likely to last?
BNZ chief economist Mike Jones has compared the annual cost of entering a new rental tenancy with the annual cash cost of purchasing and running a median-priced home.
He said, on the high levels numbers, it was still more expensive to service a new house purchase than it was to pay rent on a roughly equivalent house but the gap had narrowed significantly over the past two-and-a-half years.
"Home ownership costs have declined as a share of income as flat to falling house prices and lower mortgage rates have offset higher costs from rates, insurance and maintenance."
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